Women in Venture Capital: Why So Few?
Prepared for:Claudia Iannazzo, Pereg Ventures
Prepared by: Columbia University, School of International and Public Affairs (SIPA)
Aleena Ali, Sama Habib, Sunmoon Jang, Ying Miao, Liyang Xu
Date:
May 12, 2016
Advisor:
Adam Quinton
1
Table of Contents
1. Executive Summary
3
2. Introduction & Key Questions
4
3. Backgrounds
6
4. Demographics
8
5. Methodology
10
6. Challenges of Women in the VC
A) Fund Raising
12
B) Unconscious Bias
14
C) Male-dominated Work Culture
17
D) Legal Issues
18
E) Lack of Role Models/Women Mentors
20
F) Lack of Human Resources Policies
21
G) Work and Life Balance
23
H) Personality Traits
24
I) Education
26
J) Few Women Founders
28
7. Insights from Male VC
30
8. Recommended Solutions
33
9. Acknowledgements
35
10. Appendices 1-4
36
11. References
43
2
1. Executive Summary
The Columbia University School of International and Public Affairs (SIPA) Spring Capstone workshop
consists of a research project with Pereg Ventures, a venture capital firm headquartered in New York
City that invests in marketing, advertising and analytic tech companies. The SIPA Capstone Team
(hereafter referred to as the team) was asked to investigate and provide policy recommendations on
“Why are there so few women working in the Venture Capital (VC) industry?”
Over the last decade the proportion of women partners categorized as key decision makers in United
States VC firms has declined from 10% to 5-8%. Women representation in the S&P 500 Finance and
insurance companies is roughly around 20% on average, 5-8% in the VC world is truly an extreme
case1. The team tried to identify reasons for the decline by analyzing nine assumptions, including
unconscious bias, male dominated work culture, education and fund raising. Because VC fuels the
high growth companies of tomorrow, having a diverse set of decision makers is more advantageous
for the VC industry, for instance, higher returns to investors, more inclusive culture and higher
possibility to fund women entrepreneurs.
To further analyze the low representation of women in VC, the team researched the existing
literature on the subject. From this research, the team developed nine key assumptions that it
believed could explain the low representation of women in VC. From these nine assumptions, the
team created field research questions to test the assumptions. Field research consisted of 54
interviews with men and women VCs. From the interviews, the team analyzed the assumptions and
developed new findings that helped in devising the below set of recommendations.
To encourage VC industry professionals to recognize the value of hiring more women, the team
makes the following recommendations:
1) Recognize the unconscious bias
2) Increase woman mentorship
3) Train women VCs on fund raising
4) Build a powerful and inclusive network
5) Create public awareness
6) Encourage job applications
7) Empower HR and adopt the HR mindset
8) Develop state-backed VC influences
As a result of this study, the team believes that more heterogeneous decision making groups would
benefit the entire VC industry.
1
Women in S&P 500 Finance and Insurance. (2012). Retrieved May 11, 2016, from http://www.catalyst.org/knowledge/women-sp-500-finance-andinsurance-0
3
2. Introduction & Key Questions
Venture capitalists (VC) are an integral part of the success of future goods and services Americans
receive. By having the power to fund new ideas, venture capitalists influence America’s imagination.
The nation depends on them to deliver “winners”, and indeed there have been numerous success
stories. Just turn to Silicon Valley. Yet when we take a closer look at who these VCs are, we find that
they are not representative of the nation, which begs the questions, has the industry been holding
out on us?
According to the National Venture Capital Association/Dow Jones VentureSource, men comprise 89%
of VC partners.2 Specifically, white men make up 76% of total partners, with just 10% identified as
Asian, 1% as African-American, and less than 1% as Latino.3 This lack of diversity clearly extends to
gender. However, if women drive 70-80% of consumer purchases, why is it that women only make up
5.7% of the decision makers in VC? 4 5 It would then make sense to argue, that a more diverse VC
industry could encourage women entrepreneurs who are an untapped brain trust and will massively
contribute to GDP, create wealth opportunities for women both as VCs and funded entrepreneurs
and promote diversity that leads to more successful companies.
Moreover, the chances of getting funded are materially increased for women led businesses if they
seek funding from women VCs. VC with women partners likely double the chance for women-led
companies to get funded.6 Additionally, tech startups with women executives achieve a 35% higher
return on investment.7 VCs would be wise to catch on to this diversity trend by actively recruiting
more women to join their firms. A McKinsey & Company report suggests that companies with higher
numbers of women at senior levels are also companies with better organizational and financial
performance. Gender diverse leadership gives the companies competitive advantages that returns to
the bottom line.8 Lacking diversity, in particular women, VC firms perpetuate the cycle of unconscious
bias in a setting of homogenous decision makers. Essentially, the significant lack of female
representation, especially women partners in the industry, has reduced its ability to reach market
potential, employ top talent, and as a result, limits industry growth. This paper will attempt to
address why there are so few women in Venture Capital.
2
Why Are Venture Capitalists (76% White Men) Ignoring The Future? (2014, April 29). Retrieved May 11, 2016, from http://www.forbes.com/sites/davidteten/2014/04/29/why-are-venture-capitalists-ignoring-the-future-the-emerging-domestic-economy/#5fa555102447
3 Same as above in 2.
4 Leas, M., & Oberweis, J. (2015, June 03). Venture Capital's Next Venture? Women. Retrieved May 11, 2016, from
http://techcrunch.com/2015/06/03/venture-capitals-next-venture/
5
Female startups face uphill struggle against overwhelmingly male-led Venture Capital firms. (2016, April 5). Retrieved May 11, 2016, from
http://www.alphr.com/startups/1003120/female-startups-face-uphill-struggle-against-overwhelmingly-male-led-venture
6 Gilpin, L. (n.d.). How venture capital must change: Gender equality as a business opportunity - TechRepublic. Retrieved May 11, 2016, from
http://www.techrepublic.com/article/how-venture-capital-must-change-gender-equality-as-a-business-opportunity/
7
Gompers, P. A., Mukharlyamov, V., Weisburst, E., & Xuan, Y. (n.d.). Gender Effects in Venture Capital. SSRN Electronic Journal SSRN Journal.
doi:10.2139/ssrn.2445497
8 McKinsey & Company, (2007) Desvaux, G., Devillard-Hoellinger, S., & Baumgarten, P. (n.d.). Women Matter: Gender Diversity, A Corporate Performance Driver.
4
“There is an enormous untapped investment opportunity for venture
capitalists smart enough to look at the numbers and fund women
entrepreneurs.” Dr. Candida Brush, the lead author of the Diana Report9
A firm’s ability to embrace diversity allows it to optimize returns and profitability. In groups of
homogenous decision makers, internal beliefs are not challenged and the status quo prevails, which
contributes to a lack of innovation and thorough analysis of investment decisions.10 In the case of VC,
a homogenous group of male investors may lose potential profitable investments as a result of
promoting one way of thinking and considering it to be the only right way to approach investment
decisions. This phenomenon is explained in greater detail under the Unconscious Bias section of this
report.
Studies have shown repeatedly that there is money to be made through diversity. For example,
McKinsey’s research shows a high correlation between a firm’s financial performance and the
number of women in senior level manager roles.11 Moreover, the research suggests that women
managers tend to balance the risk-taking style of their male colleagues, a trait especially important in
protecting profits in bad times. As a result, diversity inclusive teams are better able to compete in the
market, and therefore lead their companies to excel against competitors. Encouraging higher
participation of women in the VC is a real opportunity to add value for the industry, which will allow
for unique solutions, and from the increased revenues from untapped markets, an increase in returns
to investors in the end.
For comparison, across hedge funds, VCs, private equity and mutual funds, the number of women
managers and partners ranges 5-10%. As of 2015, less than 2% of hedge funds were run or owned by
women, with the majority of those managing less than $100 million of funds. Yet, hedge funds
owned and run by women have annualized returns of an average of 59.43% from 2007 to 2015,
compared with an average of 36.69% for the whole industry posted by the composite index,
according to figures released in September by Chicago-based Hedge Fund Research Inc.12 The lack of
women is not unique to the VCs but is also observable across the financial sector.
Key Questions
This report aims to expand on the discussion of diversity in the VC and answer the following
questions:
1. What causes the low percentage of women in the VC?
2. Why is there a low percentage of women mean for the VC industry?
3. How can we provide policy recommendations to the VC industry to improve the situation?
9
Brush, C. (n.d.). WOMEN ENTREPRENEURS 2014: BRIDGING THE GENDER GAP IN VENTURE CAPITAL. September, 2014.
Blank, C. (n.d.). How Can Groupthink Affect an Organization? Retrieved May 11, 2016, from http://smallbusiness.chron.com/can-groupthink-affectorganization-26044.html
11
Same as above in 8.
12
Hedge Fund Indices, Databases and Performance Reports | Hedge Fund Research. (n.d.). Retrieved May 11, 2016, from https://www.hedgefundresearch.com/
10
5
3. Background
Venture Capital is a segment of private equity. It is a type of investment that focuses on emerging,
generally risky, businesses whose entrepreneurial founders require early funding to develop
prototypes, perform beta-testing and otherwise finance their dreams. In the U.S. in 2015, there was
close to 5,000 deals, with a total investment of nearly $60 billion13, marking a huge pool of resources
to fund new ideas and changes.
Table 1: Total U.S. Venture Capital Investment (1995-2015)
( Source: SIPA Capstone Team Analysis; pwc/NVCA )
There are several stages to venture capital. The earliest stage is seed capital, which is often put up by
angel investors, to help those entrepreneurs with a business concept - but nothing else – that seek
funding to research and develop an idea. Early stage capital is next, when the business is in the
startup phase. Most VCs enter the picture at this point. Expansion capital is the second or third stage
of funding for growth of a company that is generating revenue. The final stage is the Initial public
offering - listing shares of the venture on a stock exchange and selling some of them to public
investors. At this stage, angel investors and venture capital funds will usually recoup some (or all) of
the capital they have advanced, shifting some of the risk to the public investors.
More broadly, VC is a term used to describe financing provided to startups, early stage businesses as
well as turnaround situations. However, the manner in which the financing is provided to a company
13
Historical trend data, Retrieved May 11, 2016, from https://www.pwcmoneytree.com/HistoricTrends/CustomQueryHistoricTrend: Source: PwC/NVCA
MoneyTreeTM Report
6
is where the many variations on potential deal structures arise. The financing can be raised through
debt, equity or a combination of the two (such as a convertible loan or a loan with stock options). We
differentiate between Series A and B as follows. Stock of a company can be divided into different
series, which will occur when there is more than one round of financing. For example, if preferred
(Series A) shares were already issued, and the company does another round, it can call the new
preferred shares Series B. Each Series can have different dividend, liquidation, voting and other
rights.
At a foundational level, VC is as simple as a person or a fund with money that invests in a start-up to
help provide that start-up with the necessary funds to grow the business. The goal is to fund a seed
company and get strong financial returns. Giving the company seed money to get started (and later
infusions of capital to allow it to grow), VCs purchase equity in companies with a product or structure
that will allow them to revolutionize an industry - or create a new one.
In general cases, VC firms do not borrow money with the equity capital they raise, so there is little or
no financial leverage inherent in VC14. Some of the main risks that VC investors underwrite are
business risk and/or technology risk. The risks are either that the startup’s idea falls flat upon
execution or that the new technology does not work. Increasingly, private equity managers of all
stripes generate returns through operational enhancement, i.e. actually improving the management
of portfolio companies. These enhancements can range from sourcing better and cheaper raw
materials to unlocking new markets for products. Successful VC funds also owe their success to a
well-honed process. VC success is all about working with entrepreneurs.
Great VC investors use their business-building experience to spot not only brilliant concepts but also
brilliant teams. They can recognize personality combinations that will bring a smart idea to market.
VC funds have an opportunity to explore new markets before they even really exist. They can and do
take chances on far-fetched ideas. They are in search of visionary concepts and revolutionary
companies.
As for the geography of U.S. venture investment, Silicon Valley is still the world's biggest hub of
entrepreneurial activity, but New York's Silicon Alley now boasts hundreds of start-ups, and
Massachusetts is considered a biotech Mecca. In 2015, 1,773 California-based companies received
$33.7 billion in institutional VC, followed by New York ($6.2 billion), Massachusetts ($5.7 billion),
Washington State ($1.2 billion), Texas ($1.1 billion), and Illinois ($1.1 billion)15. And the city with the
highest start-up density in the world is thousands of miles away from Silicon Valley: it is Tel Aviv,
Israel.
14
Chapter 1: The Truth about Venture Capital | Artivest. (n.d.). Retrieved May 11, 2016, from https://artivest.co/learn/chapter-1-the-truth-about-venture-capital/
15 Same as above in 13.
7
4. Demographics
There are various studies that include demographic information on women in VC. Although they
apply different standards and data sources, the percentage of women professionals in the VC is
comparable. In 2015, The National Venture Capital Association (NVCA) estimated that there are
5,680 venture capital “professionals” across its set of 803 VC firms. However, since the NVCA’s
“professionals” include individuals outside the strictly imposed due diligence and investment roles,
the calculation of the correct female-to-male ratio of venture capitalists is not possible.16
The Babson study defines investment professionals only as those who are listed as “Partner, “General
Partner,” or “Limited Partner”. Other research papers do not necessarily adopt the same
methodology. For example, the Gompers report uses “female venture capitalists” to include every
woman working in the VC regardless of position. According to the Babson study, the number of active
VC firms (defined as those who had made an investment in the last three years) is 1,562.17 This is
significantly larger than the 803 venture capital firms in NVCA data.
“After we published the Diana Report on VC we got over 1 billion media
hits. However, only one VC firm reached out to us for advice.”
- Phone Interview with Dr. Candida Brush (April 8, 2016)
Moreover, not all women working at VCs are partners. There are non-investing roles and investing
roles, and though the former is overwhelmingly female, the latter controls major investment
decisions. In research done by The Social Capital Partnership, women make up 60% of non-investing
roles at venture firms in the survey of 71 funds, but only 8% of the senior investment team.
According to the Page Mill Publishing on Study of Females in Venture Capital Industry in 2015, there
are 403 female VCs in the U.S. Their definition of women in the VC are those who conducted
investment due diligence and/or participated in investment decisions for their respective firms. The
report omitted women who served in operational, financing, or investor-facing positions. Out of the
NVCA estimates of 5,680 venture capital “professionals”, 403 women from the Page Mill study
represent roughly 7%.
16
17
Venture Investment - NVCA. (n.d.). Retrieved May 11, 2016, from http://nvca.org/research/venture-investment
Same as above in 9.
8
As shown in Table 2, there are slight differences between studies; however, for the consistency of this
report, the team will use 5-8% as the level of women VC partners. Below is a summary of the four
major and most recent reports on women in VC: Additional information on the Table 2 is in Appendix
4.
Table 2: Women in the VC: Statistics and Definition on Leadership
Number of
Women
Published Year
Definition of Women Leadership
2015
Women who served in operational,
financing, or investor-facing positions
were omitted
2014
Those who were listed as “Partner,
“General Partner,” or “Limited
Partner” in 1,562 VC firms who had
made investments in the last three
years
6%
2015
Female venture capitalists in all
venture capital investments from
1975 to 2003
The Social
Capital
41
Partnership
8%
2015
Female members in senior
investment teams in 71 funds
PitchBook
N/A
6%
2015
Investment decision makers at all U.S.
VC firms that have raised at least
$100 million since 2009
Forbes
N/A
5%
2015
5 women out of 100 VC investors
(The Midas List from the Forbes)
Tech
Crunch
N/A
7%
2016
7% of partners at top 100 venture
firms are women.
Page Mill
Babson
Gompers
403
239
212
% of Women
7%
6%
( Source: SIPA Capstone Team Analysis; various data sources )
9
5. Methodology
The team completed the research in three phases.
Exhibit 1: Research in Three Phases
( Source: SIPA Capstone Team )
In the first phase, the team conducted research on the VC industry to discover existing literature on
the status of women in VC. This phase provided the team with possible assumptions as to why there
are so few women in the VC. The team identified themes that could make the VC space a particularly
unattractive industry for women. The team created the following list of challenges women face in VC:
A)
B)
C)
D)
E)
F)
G)
H)
I)
J)
Fund raising
Unconscious bias
Male-dominated work culture
Legal issues
Lack of role models/women mentors
Lack of human resources policies
Work and life balance
Personality Traits
Education
Few women founders
In phase two, field research, the team conducted interviews with an extensive list of Venture
Capitalists. Along with the project advisor and client, the team developed questionnaires for men and
women working in VC. The interview, composed of roughly 30 quantitative and qualitative questions,
not only tested the assumptions, but also asked open-ended questions to explore participants’ points
of view. The demographics of the participants are shown in Table 3, as the designed sampling criteria
aimed to include representatives from across position, region and type of firm.
10
In total, the team conducted 54 interviews, 41 of which were with women and 13 with men. Given
that there are only 403 women in the U.S. VC industry, the team was able to capture roughly 10% of
the true population mean of the industry, derived as a simple random sample approach.
Table 3: Sample of the VC Interview
Interviews by Gender
Female 41, Male 13
Total: 54
Investing Characteristics
(Women Only)
Investing Team 38
Non-investing Team 3
Total: 41
Titles and Positions
(Women Only)
Founders and Partners 20
Associate, Senior Associate, Principle and VP 15
Analyst 4
HR and relationship manager 2
Total: 41
Regions
(Women Only)
East Coast 34
West Coast 5
China 2
Total: 41
Types of VC Firms
(Women Only)
Institutional 32
Corporate 6
Accelerator and Family Office 3
Total: 41
( Source: SIPA Capstone Team )
However, the total number of respondents in each figure in 1 – 10 in the body of this report varies
and does not match the total number of interviewees shown in Table 3. Because they either rejected
to answer to certain questions or answered not in Yes or No as the question asked.
Exhibit 2: Interview Questionnaires
Warm up Questions
to know career
background
Q1~Q8
Get to know the
formal system and
gender inequality in
the interviewee's
organization:
Q9~Q14
Informal network and
unconscious bias：
Q15~Q20
Recommendation
and Women's
advancement in VC
space
Q21~Q24
( Source: SIPA Capstone Team )
11
6. Challenges of Women in VC
In this section, the team explores the nine assumptions and explains key findings from the interviews.
A) Fund Raising
There are two types of VC: Corporate and institutional. Corporate venture capital, defied by the
Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative
or specialist firm, to which it may also provide management and marketing expertise; the objective is
to gain a specific competitive advantage”18. It is the investment of corporate funds directly in external
startup companies.19
Institutional venture capital represents managed funds from $5M to $1B under management to
invest in companies with high growth potential. This capital comes from limited partners, the fund’s
investors, and is managed by general partners who run the fund and make investment decisions. A
small percentage of the institutional VC firms raise the bulk of the total venture capital20.
Institutional VCs can either start their own fund or join an established one. The significant source of
fund includes personal wealth and raised capital. Proceeds from the sale of start-ups is also a
common way for VCs who were previously entrepreneurs to raise investment capital. The team made
some assumptions and tested them through research and interviews. Assumptions include: Few
women enter VC because they are not comfortable raising funds.
“If I show a strong track record and I do believe what I'm doing,
I'd be comfortable to ask friends and family to invest in my fund.
I’ve never asked so far, however, I will be comfortable
if I have a track record and can generate more returns.”
Interview from an Associate Female VC
To test this assumption, the team asked women in VC companies who held senior positions, “How
comfortable are you asking your friends and family to invest in your fund?” Four out of 29 women
interviewees and 4 out of 11 male interviewees who answered the question said yes to the question
if personal wealth was helpful to enter the VC. Figure 1 shows that 35% of women said they were
comfortable asking and 46% were not. Meanwhile, 44% of the men surveyed replied they were
comfortable asking for funds.
18
What is corporate venturing? definition and meaning. (n.d.). Retrieved May 11, 2016, from http://www.businessdictionary.com/definition/corporateventuring.html
19
"Making Sense of Corporate Venture Capital." HBS Working Knowledge. 25 Mar. 2002.
20 Waite, Rita. "Not The Same: Understanding Corporate Venture Capital Versus Institutional VCs." CB Insights Blog. 05 Feb. 2016.
12
Figure 1: Comfortable to Raise Funds from Friends and Family
[ Responses from Female VC: n=31]
[ Male VC: n= 9 ]
( Source: SIPA Capstone Team Analysis)
Among those who feel uncomfortable raising funds, some brought personal wealth into their funds,
which either came from start-up proceeds or accumulated savings. Most interviewees who
responded to these questions are VCs who hold senior positions. In other words, they have the ability
to or are comfortable with raising funds. VCs do not necessarily have to bring personal wealth to VC
industry, but they need to be able to raise money. It is a myth of the VC industry that "you need to
bring personal wealth to become a VC." Interviewees who answered other includes corporate VCs
and VCs who would not ask close friends and families their investments until they have a proven track
record of success.
Figure 2: Personal Wealth Contribution
[ Responses from Female VC: n=29]
[ Male VC: n=11 ]
( Source: SIPA Capstone Team Analysis)
Lacking channels to raise funds and lacking networking or skills may be problems. Thus, women need
to learn how to raise money. Mentoring programs or formal courses to teach women how to raise
funds would help women enter the VC industry and help enable juniors become seniors.
13
B) Unconscious Bias
Gender is the first thing noticed, coded, and categorized during social interaction. Thus, we should
expect a bottlenecking of cognitive bias toward one gender or another. For the purpose of this
report, the team used the definitions of unconscious bias explained in Table 3.
Certain scenarios can activate unconscious attitudes and beliefs. For example, many of our
interviewees responded that some entrepreneurs feel that a male venture capitalists might be able
to connect them better with customers and other key contacts. Thus during meetings with VCs,
entrepreneurs may focus their eye contact and attention on the male in the room instead of the
woman, who may in fact, be more senior than her male colleague.
Table 4: Types of Unconscious Bias21,22
Type
Definition
Example
Homophily
Love of the same - the tendency to
associate with people like us.
“Tom is likely to be great for the role; he
went to the same university I did.”
In-group vs.
Out-group
People who share our particular
qualities are included in the “In”
group = US.
Those who do not share the same
qualities form the ‘Out’ group =
THEM.
We treat those “In” more favorably
than those “Out”.
Mark plays golf with Fred, the CEO. Mark is
awarded the most prestigious accounts has
the opportunity to present to the board.
Dave cannot play golf and while he is at the
same managerial level as Mark, he does not
get offered the same opportunity.
Stereotype
Oversimplified opinions that do not “Gen Y employees are demanding and feel
account for individual differences.
entitled to promotions without working for
them.”
Confirmation
The tendency to search for or
“Jack has only been here for six months and
interpret information and behaviors he already wants a pay raise. I told you all
in a way that confirms what we
Gen Y employees are entitled.”
already believe.
( Source: SIPA Capstone Team Analysis)
21
Gilovich, T., & Savitsky, K. (n.d.). Like Goes with Like: The Role of Representativeness in Erroneous and Pseudo-Scientific Beliefs. Heuristics and Biases
The Psychology of Intuitive Judgment, 617-624.
22
Tversky, A., & Kahneman, D. (n.d.). Judgment under uncertainty: Heuristics and biases. Judgment under Uncertainty Heuristics and Biases, 3-20
14
Other empirical evidence supports the existence of these biases. In one combined Harvard, Wharton
and MIT study, identical pitch videos were narrated by men and women, and investors chose the
male-narrated videos 68% of the time.23
Early stage investors operate and make decisions with rather limited evidence and a high degree of
uncertainty. It would be virtually impossible for them to operate without these heuristics (more
commonly called intuition or pattern-matching) and the resulting cognitive biases.
Representativeness (i.e. how similar the stimulus is to standard stored in memory) and availability
(how easily one can recall a similar example) are the most commonly used heuristics. The more
uncertainty and the less evidence available in a given situation, the more those involved are forced to
rely on heuristics to govern an intuitive decision. These heuristics increase cognitive bias. Coupled
with a homogenous set of decision makers, the likelihood of unconscious bias groupthink in VC is
evident in its gender imbalanced industry.
“A lot of young women are steered away from subjects like math and
science, and it is down to the biases people have.
The industry has a bias against women in certain jobs and women have
their own biases too.”
Interview from a Senior Female VC
When asked, “Do you feel your boss recognizes your contribution in meetings as they do for your
male colleagues at the same level?” 29% of women feel that their male bosses do not recognize their
contributions as they do for their male colleagues as seen in Figure 3.
Figure 3: Recognition of Contribution at Meetings
[ Responses from Female VC: n=31]
( Source: SIPA Capstone Team Analysis)
23
Johnson, W. (2015, November 25). I'm a Female Author, So Why Did I Want a Man to Narrate My Audiobook? Retrieved May 11, 2016, from
https://hbr.org/2015/11/im-a-female-author-so-why-did-i-want-a-man-to-narrate-my-audiobook
15
Key findings on unconscious bias
• 47% of the women believe that it is hard to find a job in VC or to get promoted because they are
female. This shows that women have their own biases and will need to step outside their own
gender framework. This includes not internalizing situations at work and focus on performance.
• 17% of women attend male centered events such as poker nights and gaming rooms. This points to
the fact that women feel secluded in common VC informal networking opportunities. Women who
do socialize with their male colleagues after work hours usually do so via dinner or drinks, which is
more inclusive.
• 41% of women stated that they experience difficulties communicating with male colleagues. One
female interviewee explained that, “men want me to talk to them like them” which relates to the
unconscious bias theory of homophily mentioned in Table 4.
• 49% of the women felt that the entrepreneurs did not treat them in the same way as their male
colleagues. This refers to the in-group unconscious bias theory stated in Table 4. Most of our
interviewees elude to the fact that it takes time for them get adjusted to the cultural norms in the
firm, especially if a male entrepreneur has an alpha personality, or has a hard time making simple
eye contact with everyone on the funding panel. It is also interesting that female entrepreneurs
expect and try to connect better with female VC partners, hoping that their products and services
will be understood better by the females.
• 19% of women felt they had to be careful rebutting/refuting a comment from a male colleague as
oppose to a female colleague.
• 21% of women said that in meetings, note taking was assumed to be their primary task.
It is hard to define whether the bias is more on the women or the men side but it definitely exists and
needs to be addressed at an industry level.
“The fundamental problem, especially in Silicon Valley, is that it loves to
think it’s a meritocracy, which is bull. It’s not. It’s a mirror-cracy.”
Adam Quinton, SIPA Capstone Advisor & CEO of Lucas Point Ventures
In conclusion, we acknowledge this hypothesis to be true. Homophily, stereotype, “in-group” and
confirmation biases all prevail in the VC space and were captured in our interview findings. Many
women nodded in recognition of the Elephant in the Valley study that indicated glass ceiling and
sexist attitudes female executives in Silicon Valley endured, such as the shocking fact that 60% have
experienced some form of harassment.24
24
Elephant in the Valley. (n.d.). Retrieved May 11, 2016, from http://elephantinthevalley.com/
16
C) Male-dominated Work Culture
Women in S&P 500 Finance indicated that only 20% of board seats are occupied by women.25 In the
case of Venture Capital, the number is significantly lower. As previously discussed, VC women
partners hold only 5-8%, as reviewed in the demographics. Considering this, the team questioned if
the male dominated work environment would be a concern for women to join the VC. The VC work
culture is predominantly described as direct, fast-paced and highly competitive in nature.
“Generally, women were quite skewed into certain roles. In the
investment team, I was the only female analyst when I joined my first VC
firm.” Interview from an Associate Female VC
Figure 4: Male Dominated Work Culture
[ Responses from Female VC: n=33]
( Source: SIPA Capstone Team Analysis)
To test this, we asked whether the male-dominated culture in the VC was a concern for women when
they joined their respective firms. Figure 4 shows that 85% of women did not care about the culture,
while 15% were concerned. Considering that women joined VC either from careers that were already
male-dominated, or directly from undergraduates, they did not let the culture become a barrier for
their choice to enter VC, despite knowing that it is male-dominated. Had they factored this into their
decision, they would not have had many options left. Although most women initially did not foresee
a male-dominated culture as an issue in joining VC, they said that after two years, the issue became
more prevalent.
"Out of 153 applicants, I might be the only woman who applied for the
open position.”
Interview from a Principal Female VC
25
Women in Canadian, US, and Global Financial Services. (2012). Retrieved May 11, 2016, from http://www.catalyst.org/knowledge/women-canadianus-and-global-financial-services
17
D) Legal Issues
The team wanted to explore the effects of legal rights on women’s decision to enter, stay or leave the
VC industry. Our assumption was that law precedents, such as Ellen Pao’s case, negatively affected
women either entering or staying in VC. The case, which showed a senior woman in VC suing her
company for discrimination and not winning, may have discouraged other senior women from
pursuing their own concerns regarding gender discrimination. Not only did Ms. Pao lose on all counts
of a high-profile sexual discrimination case earlier this year, but Judge Harold Kahn officially ordered
her to pay more than a quarter of a million dollars in court costs to the VC firm, Kleiner Perkins
Caufield & Byers.
Many believed that the case, while it not successful for Pao, would spark a wave of women
expressing their own gender concerns in VC. However, it has been more like a small ripple. In
addition, the team believed that given the small and intimate work environment VCs operate in,
women do not feel comfortable pursuing a legal option as it could damage their reputation,
negatively affect their work and/or be perceived as a weakness.
“There is more downside than upside.
Even if you win, you will never get a job in the industry again.”
Interview from a Principal Female VC
Figure 5: Reluctance of Legal Action in case of discrimination
[ Responses from Female VC: n=32]
( Source: SIPA Capstone Team Analysis)
The team’s assumption was that women tend to sue their companies for gender discrimination at far
lower rates than they actually experience it. Since access to lawsuit information is not publicly
available, the team only asked a question pertaining to legal assistance accessibility for both men and
women in VC during the interviews.
The team interviewed three attorneys to gain their perspective on this issue. All three are in the field
of employment law. One female lawyer located in Silicon Valley provided her perspective on how it
18
felt to be on the defending side of Ellen Pao’s case. This report summarizes the perspectives of all
lawyers interviewed by the team. As mentioned above, the team cannot quote the exact number of
lawsuits filed by women in the VC or even quantify how that trend has developed from 1999 to 2014
because of missing data. The team can discuss the nature of the lawsuits. There was a difference in
opinion amongst the lawyers. However, broadly speaking, the compensation-related lawsuits tend to
outweigh gender discrimination lawsuits for the entire financial services industry. Next in line are
termination cases, which occur only after the employee is no longer related to a firm. But generally
speaking, our interviews clarified that the nature of lawsuits has no correlation with the amount of
women in the VC. According to our interviews, these cases have always existed and will continue to
exist in less visible ways.
Workplace issues vary from employee compensation to equal employment issues, gender
discrimination, failure to promote, industry discrimination and sexual harassment. The lawyers also
did not have a clear response on if the VC industry has enough protection rights for women. This is
an interesting variable to consider, because if these cases (those filed) are not public information,
then the industry indirectly endorses “what happens behind doors will most likely stay behind doors”
ideology. Partners at VC firms do not come under employment law, so a senior woman in the VC
industry cannot do much relative to junior female counterparts. It is because of the legal policies that
women are at a disadvantage. Women cannot leave the firms at senior ranks and do not have a
platform to file for other legal matters since they are no longer capped as an “employee” due to their
partner status at the firm.
Broadly speaking, the gender-based lawsuits operate in other financial services areas in the same
manner. Simply because women are a minority in VC in comparison to private equity does not mean
that it is a VC-specific problem, as one lawyer noted.
Other platforms where women can raise their concerns are state level departments; such as the US
Department of Labor and the State Employment Commission. Unfortunately, because they are
administrative agencies, they are not considered seriously in the legal industry. Other ways to file
legal concerns prior to any major lawsuit filings are options of mediation, or third party arbitration
but this can only occur if both parties tend to participate. Plus the mediation is costly, as pointed out
by one of the lawyer interviewees. Although the nature of mediation is more private than a public
lawsuit, it offers its own barriers of cost and mutual consent as consent is rare, and an easier solution
is to terminate such an employee, as noted by one of our interviewee).
In conclusion and based on our interviews, given current VC practices, there is an unstructured
and unofficial legal framework in the industry that requires improvement in terms of checks and
balances. Moreover, limited legal support explains why a significant number of women observe
gender discrimination in the work place but decide to either remain quiet or move to a different
firm, causing the number of women in VC to continue to decrease.
19
E) Lack of Role Models/Women Mentors
Mentoring is one of the oldest forms of influence and knowledge sharing. A mentor is an individual,
usually older and more experienced, who helps and guides another’s development. This guidance is
provided without the expectation of personal or monetary gain on the mentor’s part. More and more
businesses are embracing the concept of mentoring as a professional development tool26. Through
mentoring, organizations are seeing dramatic improvements in efficiency, productivity and also the
passing of institutional knowledge and leadership skills from one generation to the next. Mentoring
important for in venture capital, as there are many different career paths in the industry and the path
is uncertain.
When asked, “Is there any formal or informal mentorship in your organization?” as Figure 6 shows,
69% of female respondents said yes. Of those who said yes, 65% described their mentorship as
formal. This means that the small majority of women in VC do have some type of mentorship
whether formal or informal. Although it would seem that a lack of mentorship does not have a strong
effect on a woman’s decision to enter VC because as the data show, women do have mentors,
compared to men, but the numbers are drastically smaller. For example, when men in VC were asked
the same question, 80% said yes to have formal or informal mentorship. With 80% of males
describing their mentorship as formal mentorship. This leads us to conclude that a lack of mentorship
is at least a factor in a woman’s decision to either not enter or leave the industry.
“Rarely does a male mentor tell a female mentee “you are wrong,”
because of being afraid to hurt her feelings. He offers little criticism.
But I want to be told the truth to grow faster!”
Interview from a Female VC Founding Partner
Based on our interviews, many men VCs have better chances to find a mentor. Some men actively
seek mentors informally. They form friendships, and they are direct in asking questions.
Figure 6: Formal or Informal Mentorship in Organization
[ Responses from Female VC: n=32]
[ Male VC: n=10 ]
( Source: SIPA Capstone Team Analysis)
26
Hunt, David Marshall, and Carol Michael. "Mentorship: A career training and development tool." Academy of management Review 8, no. 3 (1983):
475-485.
20
F) Lack of Human Resources Policies
According to the Department of Labor, Women’s Bureau, male-dominated industries hire 25% or
fewer women27. Those industries are likely not to provide more opportunities for women, as a result,
to excel their careers, women are experiencing relatively more difficulties than their male colleagues.
This explains male-dominated industries in general; however, VC is no exception with its low
representation of women. Even if it was not an issue when junior women joined VCs, as they develop
careers, it becomes an issue. So, having human resources policies to promote diversity is critical to
enable women to excel in VC.
As Figure 7 shows, 53% of VC firms do not have a human resources (HR) team in house. Due to the
lack of an HR department, CFO and partners make decisions on talent recruiting and management.
Without established HR teams, the firms rarely promote policies regarding diversity and gender.
Often, the HR process in small institutional VC firms is not transparent. However, in general,
corporate VC HR process is more transparent mainly due to the sharing of administrative functions
with the holding company.
Figure 7: Existence of Human Resources Department in firms
[ Responses from Female VC: n=32]
( Source: SIPA Capstone Team Analysis)
“VC is like a two-year slot job. Without fundamental strategy changes,
it’s hard to change the lack of transparency and the promotion
bottleneck.”
Interview from a Female VC Partner
Even in the case of corporate VC that has an HR team and relatively rigorous hiring process, only a
few women apply for open positions. This means that the talent pool and/or pipeline to hire more
27
Women's Bureau (WB) - Nontraditional Occupations for Women in 2008. (n.d.). Retrieved May 11, 2016, from https://www.dol.gov/wb/factsheets/nontra2008.htm#.UJvbO9ePzWI
21
women becomes very narrow at the top. When VC firms want to hire more women, the limited
number of female applicants should be an issue. Presumably, there is no such aspect as an
established career path especially in a smaller VC firm. Successful VCs come from various
backgrounds such as journalism, top management consulting or law firms, and history majors. Firms
should develop a creative strategy to find women inside or outside VC networks. Even without an HR
team, it should be critical to recognize the function of HR.
“Whenever I post a job, we get a lot more men than women that apply.
On average, 70% of applicants are men."
Interview from an Associate Female VC
Figure 8: Fairness of Hiring Process
[ Responses from Female VC: n=31]
( Source: SIPA Capstone Team Analysis)
As shown in Figure 8 when asked, “Was the hiring process for your organization fair?” 79% of
interviewees thought the hiring process of their firms fair to women. Also, most interviewees did not
have critical problems with promotions, performance review, or compensation. However, the
process of review is by nature ad-hoc in VC, and the promotion process is not transparent and
subjective.
“At my previous firm, there were five partners, so to get promoted to
partner, you had to leave the company and come back as a partner.”
Interview from a Partner Female VC
Even if HR team is in house, it may not be a silver bullet solution. Because the HR person has less
authority over the HR decision than their partner or equivalent decision makers. Instead, the team
uncovered from the interviews that having a HR process and policy in place should be helpful to build
awareness of VC as a promising career, increase the pipeline for recruiting and evaluate the
performance fairly. Thus, even though there is no HR team or person in house, having the HR policy
should be taken more seriously.
22
G) Work and Life Balance
According to the Elephant in the Valley28 survey, 75% of women were asked about family life, marital
status and children in interviews. Of these, 40% felt the need to speak less about their family to be
taken more seriously. Of those who took maternity leave, 52% shortened their leave because they
thought it would hurt their career. So, there should be opposite pressure on women in the sector to
concentrate more on work to compete with those preconceptions. While pay was important to
women in finance, there were clear differences between genders on what is valued in an employer.
Among female respondents, 65% expected manageable working hours compared to 47% of men, and
50% of women wanted flexible working options compared to just 34% of male respondents.
Stewart D. Friedman, founding director of the Wharton Work/Life Integration Project, researched the
work and life balance topic in the lens of work and life integration or harmony, which focused on
professionals who developed the skills to integrate their life and work successfully. In his new book,
Leading the Life You Want, Friedman profiles six people who embody these necessary skills to
integrate work and life in terms of being real, being whole, and being innovative.29 One of them was
the Chief Operation Officer of Facebook, Sheryl Sandberg who also redefined the work and life
balance to be a leader as “work and life integration.” Friedman emphasized “The Critical Steps to
Integrating Work and Life” in his interview with Jeffrey Klein, executive director of the Wharton
Leadership Program;
“We really have to be focusing the conversation on what I refer to as four-way wins: things
that you can do that are within your control that enable you to create value in some way and
demonstrably improve results not just at work, not just for yourself, not just for your
community, not just for your family, but for all four.”
With those lessons from the desk research, initially, the team assumed that the perceived work and
life balance would be worse than in any other sector, including marketing, consulting, law, and
accounting firms, as well as Fortune 500 companies. However, as shown in Figure 9, when asked,
“Compared to your previous job, is your work-life balance better in a VC?” 67% of women
interviewed answered that they are satisfied with the work-life balance, and most of 15% who
answered other indicated that the equation of work and life balance in VC should be measured
differently.
Indeed, the concept of “work and life integration” was mentioned multiple times during the
interviews. In terms of the previous jobs (except for tech companies or Fortune 500 companies),
more than 62% of women VCs came from client-facing jobs such as management consulting, law
firms or media agencies. So, they are relatively satisfied with the current work conditions that they
can control their schedules on their own. Also, over the years, they found their own way to manage
work and life, for instance, living near the office is helpful for them to be able to react to emergent
issues from both work and family. Also, developing the work relationships into life relationships such
as close friends was an interesting perspective.
28
Same as above in 24.
The Critical Steps to Integrating Work and Life. (n.d.). Retrieved May 11, 2016, from http://knowledge.wharton.upenn.edu/article/integrating-worklife/
29
23
Figure 9: Work Life Balance Perception
[ Responses from Female VC: n=33]
( Source: SIPA Capstone Team Analysis)
“If you are able to manage 24/7 wisely, there is always more that you can
do! And, you can see what's going to pay off.”
Interview from a Principal Female VC
In conclusion, women VCs admitted having to work harder than in their previous positions, but
provided a different perspective: 1) control of time; 2) ownership of business: setting goals and
responsibilities on deal flow; and 3) job satisfaction. Most were satisfied with their current work and
life balance. The most common reactions were “self-directed and/or flexibility.”
H) Personality Traits of Women
According to BlackRock and Bank of America Merrill Lynch, financial characteristics common to
women are described as instinct to save, feeling insecure about money, being nervous about the future and willingness to get the market returns. In the BlackRock survey, 52% of women describe their
financial outlook as "frustrated or pessimistic" based on market volatility and economic uncertainty.
On the other hand, 43% of men said the same answers. The same survey found that 22% of women
are willing to take on higher risk for a bigger return, which is smaller than 34% of men31. Karrie Van
Belle, managing director at BlackRock Canada said “We are seeing more and more women categorize
themselves as savers versus investors and they're sitting on the sidelines in cash."32
31
5 Traits of Women Investors. Wealth Blog. (n.d.). Retrieved May 11, 2016, from http://www.bankrate.com/financing/wealth/5-traits-of-women-investors/
32
Wong, C. (2016). Women's Lack Of Investing Confidence Means Men Save Nearly Twice As Much: Report. Retrieved May 11, 2016, from
http://www.huffingtonpost.ca/2016/03/07/lack-of-confidence-keeping-women-from-investing-instead-they-hold-onto-cash_n_9397142.html
24
“Female VCs are more responsible for the money and good at carrying out.
Female VCs are good at recognizing a good entrepreneur especially at the
early stage. Females are sensitive and have good instincts.”
Interview from a Principal Female VC
Strengths: Empathy, relational, community building, and consumer understanding
Women being stereotyped as risk averse may be one of the reasons that led the funds owned by
women to have better performance throughout the financial crisis. The idea of gender-stereotyping
may be controversial, and it is indeed hard to generalize the spectrum of personality, primarily
because it also depends on background, not gender. However, during the interviews, the most
mentioned words about women’s traits were relational, empathetic and good listener. Those should
offer better matches to VC. Because VC is truly a relationship business. It is important to have the
human side of investment. With those traits, women are more helpful to investigate the real issues
and problems by having richer dialogue with diverse voices, which makes better outcomes of
investment decision making and outcomes for companies with their different perspectives.
"They are usually community builders”
“The dominant internet consumers are women, who make 85% of buying
decisions, so it's incredibly valuable to have women on the team."
Interview from a Female Partner VC
Weaknesses: Lack of confidence and/or lasting power
Men are relatively outspoken. So women's ideas sometimes are not brought to the table, even
though both project the similar idea within the context. They have to put additional efforts to make a
stronger point at any given situation. They often seem not very confident or too cautious about their
ideas or opinions. They have to feel more comfortable with asking direct questions. They are not
asking promotions even. According to Her Success, women are also shy from crediting their success
to themselves. They conclude that their results were based on luck or help from someone else. This
could be an admirable trait to have in the collaborative work environment, it also deflates confidence
and allows others to make comments that imply women don’t know how or can’t invest34.
34
Women & Investing: Your Weaknesses are your Strengths. (2015). Retrieved May 11, 2016, from http://www.hersuccess.ca/women-investing-yourweaknesses-are-your-strengths/
25
“Women are easily burned out. They need more staying power to get
their hands dirty.”
Interview from an Associate Male VC
In conclusion, the personalities of women would be helpful to succeed as a VC, if women become
more confident. Especially the traits to build the community inside and outside the VC are certainly
the most sought after qualification to become a better VC. Rather than magnifying the weaknesses
of women, promoting the strengths as a women VC will position women better in VC industry.
I) Education
For a VC outsider, education and background for VC work seems to be the most obvious reason for
women not entering the industry. However, VC is not something one can major in and instead has
been associated with technical skills gained from engineering and computer science majors— fields
that historically have been male dominated. This leads some to believe that women do not naturally
gravitate toward the field as a result of their lack of relevant educational background. This is
consistent with the fact that high school boys outnumber girls by more than 4 to 1 among computer
science test-takers.35
“Education to get VC to understand where the values are located is
critical. Lack of women in VC is a structural issue starting from education.”
Interview from a Partner Female VC
However, the Page Mill study found that among the degrees of female VCs, the leading majors are: 36
Economics (15%)
Engineering (13%)
Business (12%)
Biological Sciences (8%)
35
Kurtzleben, D. (n.d.). AP Test Shows Wide Gender Gap in Computer Science, Physics. Retrieved January 14, 2014, from http://www.usnews.com/news/blogs/data-mine/2014/01/14/ap-test-shows-wide-gender-gap-in-computer-science-physics
36 Study of Females in the Venture Capital (VC) Industry, Page Mill Publishing Inc. 20 August 2015. P 25
26
“To elevate opportunities in VC, educating women in the space to
encourage them to see VC as a viable career path is a starting point.”
Interview from an Associate Female VC
Female VCs with a computer science background accounted for a mere 0.037%.37 Statistics from the
U.S. Department of Commerce show the variance in engineering degrees between the sexes is that
men account for 48% and women 18%.38 There is no uniform path to enter VC, and as the research
shows, women's lack of engineering backgrounds is not a plausible reason as to why there are so few
women in VC. This is echoed by the fact that only 41% of VCs have operations backgrounds.39
Although men and women have seemingly comparable percentages in computer science, men at 15%
and women 14%, when multiplied by the amount of workers by gender in the field, we find that men
in computer science number 100.5 million employees and women only 35 million,40 as in Exhibit 3.
Exhibit 3: College educated workers with a STEM degree by Gender, 2009
To further test the role of education and background, the team asked the following questions:
“What led you to Venture Capital?”
"Do you feel your previous job experiences were helpful in VC?” and
“Did your undergraduate studies prepare you for entering and succeeding in VC?”
37
Same as above in 36.
Beede, D. N., Julian, T. A., Langdon, D., Mckittrick, G., Khan, B., & Doms, M. E. (n.d.). Women in STEM: A Gender Gap to Innovation. SSRN Electronic
Journal SSRN Journal.
39
Kerby, R. (2016, February 10). Who Is VC? Retrieved May 11, 2016, from http://techcrunch.com/2016/02/10/who-is-a-vc/
40 Same as above in 38.
38
27
Of senior leadership positions, women found social skills and interpersonal skills to be more
advantageous than traditional technical skills. One participant described VC as ultimately “a sales
job.” Essentially, the census is that although it is not required, it does not hurt to be financially
literate and have more technical insight into computer science, engineering or operations.
As one interviewee said, “it’s very helpful to have an operating background. If you haven't lived it, it's
really hard to evaluate portfolios. For example, you’re on the investment team and you're evaluating
deals all day long, it's really helpful to have worked at a company, because it gives you so much
context on how successful this business will be. We want to help them be successful, so it gives you
more credibility when you work with these entrepreneurs. It shows them you’ve been in their shoes,
you can empathize with them, and so you need that experience to have that credibility.”
“Background is important, but it is not necessarily an engineering. I’m
investing in education, so my knowledge about U.S. education system is
much more helpful.” Interview from a Principal Female VC
Despite a lack of women in computer science, and engineers in the field, a technical education
background does not play a core role in the low rate of women in VC. While we recognize that most
woman in VC are recruited from the United States’ top Ivy League institutions, their majors and
educational experiences show no correlation to entering or not entering the VC industry. Our
respondents came from a variety of backgrounds, including media and journalism, finance and
entrepreneurs. That our respondents had unique paths into VC supports our conclusion and allows us
to rule out education as a reason there are so few women in VC. Ultimately, we can debunk the myth
that the lack of women in Science, Technology, Engineering and Math (STEM) majors accounts for the
lack of female VCs.
J) Few Women Founders
According to the research from Babson College, from 2011-2013, 15% (985 of the 6,793 VC–funded
companies) had a woman on the executive team. This number rose annually from 9% in 2011 to 18%
in 2013. These investments included seed, early-state, and later-stage venture capital funding. However, only 2.7% of the companies (183 of 6,517 companies) receiving VC funding during this period,
had a woman CEO. The total dollar investment in companies with a woman on the executive team
during 2011-2013 was 21% or $10.9 billion out of $50.8 billion. This figure also rose annually: in 2011
companies with women on the executive team received 9% ($816 million) of the total $8.9 billion invested, while in 2013 they received 27% ($7.1 billion) of the total $26.4 billion invested. However,
companies with a woman CEO only received 3% of the total VC dollars, or $1.5 billion out of the total
28
of $50.8 billion invested during 2011-201341. The average dollar investment in businesses with a
woman on the management team was slightly higher for all three years during 2011-2013, $12 million for those with women, $8 million for those with no women. For companies where the CEO is a
woman, the average investment was $8.8 million; for companies with male CEOs, the average investment was $8.3 million. The difference is not statistically significant. In this report, only 2.7% (183) of
the 6,517 companies that received VC funding have a woman in the CEO role, meaning that more
than 97% of venture-funded businesses have male CEOs42.
What's more, according to a Fortune research report published in 2014, only 4.2% of VC senior partners—the decision-makers at the firms—are women43. CrunchBase further shows that women still
only make up 14.6% of executive officers, 4.6% of Fortune 500 CEOs, and 16.9% of board members at
Fortune 500 companies. In this report, it recently analyzed more than 14,000 US-based startups. In
2009, 9.5% of startups had at least one female founder, but by 2014 it had almost doubled, reaching
18%. Even though the number of female founders has steadily increased in the last five years, women
still only make up a small number of top executive teams44.
Statistics from Babson research show that VC firms with women partners are more than twice as
likely (34% compared to 13%) to invest in companies with a woman on the executive team, and more
than three times as likely (58% vs. 15%) to invest in companies with women CEOs. However, according to the Babson research, companies with a woman on the executive team were 64% more likely to
have higher valuations at first funding and almost 50% more likely to have it at last funding. Womenled tech companies are more capital efficient and earn 35% higher return on investment, according to
a 2013 report from an online survey by researchers from the Kaufman Foundation and Duke and
Stanford Universities.
Consistently, as shown in Figure 10, when asked, “What percentage of the pitch meetings your firm
takes involve companies with at least one female founder on the team? And what percentage has
women CEOs?” Team excluded one outlier VC firm who only invests in women-led startups, on
average 17 % of the pitch meetings that the VC firms are involved is with at least one female founder
or CEO. The 17% includes 3 VC firms that are actively looking for women entrepreneurs because they
are investing in retail and consumer or starting VC with the mission to promote women founders.
Figure 10: Women Founders or CEOs at Pitch Meetings
( Source: SIPA Capstone Team Analysis)
[ Responses from Female VC: n=41]
17%
[ Male VC: n=13 ]
9.6%
41
Same as above in 9.
Same as above in 9.
43
Primack, Dan. "Venture Capital's Stunning Lack of Female Decision-makers." Fortune. 2014. Web.
44 Teare, Gené, and Ned Desmond. "Female Founders On An Upward Trend, According To CrunchBase." TechCrunch. 2015. Web.
42
29
Reasons why the women founders are few might be the same as the reasons of low representation of
women VC, such as unconscious bias, education, and male dominated culture. One of many reasons
is that investors prefer entrepreneurial ventures pitched by attractive men. A 2014 study by Harvard
Business School also showed that "male entrepreneurs were 60% more likely to achieve pitch competition success than were female entrepreneurs." Investors prefer pitches presented by male entrepreneurs, even if the pitch is the same. This effect is moderated by male physical attractiveness: attractive males were particularly persuasive. 45
“My goal is 50% to meet women founders. However, it doesn’t work out, it
stays at 30% level. But I’m sure that it’s higher, because we are striving
for.” Interview from a Principal Female VC
Also, in the report, researchers note that across the broad landscape of entrepreneurial ventures,
some prior research has determined that compared with men, women are likely to have fewer employees, lower growth projections, and lower levels of internationalization. However, conversely, recent research using a 15-year segment data from the 1,500 firms in Standard & Poor’s Financial Services suggests that female managers improve overall company performance by bringing informational and social diversity benefits to the management team, by enriching the behaviors exhibited by
managers throughout the firm, and by motivating the lower-status women in their companies.46
Insufficient data for women founders could be another factor, since the lack of data and unconscious
bias can create a negative loop where investors still keep favoring male founders. In 2013, Pinterest
technologist Tracy Chou famously highlighted the issue in her post, “Where are the numbers?”47
which exposed the lack of published data from startups and mainstream tech companies on the number of women in technical roles.
7. Insights from Male VCs
Unconscious Bias and Male Dominated Work Culture
Despite being a self-proclaimed male dominated VC industry, male VCs struggled to identify why
women do not join VCs. When asked why they believe more women do not enter VC, their answers
ranged from few women entrepreneurs to work-life balance limitations. As expected, men did not
mention unconscious bias as a hurdle. In fact, when asked, “Do you have any female friends who
have difficulties finding a job and/or getting a promotion in Venture Capital?, one respondent said, “ I
have two friends in VC, one male and one female, and both have challenges getting promoted in VC.
By its nature, VC is a small and challenging industry. So I don't think promotions are specifically
45
Brooks, Alison, Laura Huang, Sarah Kearney, and Fiona Murray. "Investors Prefer Entrepreneurial Ventures Pitched by ..." Feb. 2014. Web.
Conner, Cheryl. Forbes. Forbes Magazine, Mar. 2014. Web.
47 Chou, Tracy. "Where Are the Numbers?" Medium. Oct. 2013. Web.
46
30
difficult for women, but competitive for both genders.” While this may in fact be true, the reality is
95% of VC decision makers are men. Similar male answers revealed that the VC reality to men may
seem innocuous but in fact, only proves the unconscious bias the industry faces. For small VC firms,
the bias is ingrained in the culture to the extent that the inside group (men) are unable to
sympathize, let alone identify with the outsider (women) group.
We asked men “Do you feel that the entrepreneurs treat you in the same way as your female
colleagues?” and 90% of males said yes, compared to 47% of women who said no (given the
substitution for female colleagues as males, see Appendix for questionnaire). This means that 90% of
men feel that men and women are treated equally in the eyes of entrepreneurs, while almost half of
women in VC feel they are not treated equally. This discrepancy is alarming, as it further emphasizes
the role unconscious bias plays in VC.
Lack of Role Models/Mentors
Male VCs surveyed did not express knowledge of a lack of female mentorship or role models. Most
observed that women in VC networks existed, and assumed mentorship was not a challenge women
faced. When asked, “Do you think the mentorship program works the same way for women as it does
for men? If not, how?” only one respondent said no. The rest believed that the process was the same
for woman as it was for men with one respondent saying, “I would assume so, it's very informal and
everyone has access to the same people.” Again, the male VC results run contrary to our findings
from women who believed a lack of mentorship is a large hurdle that hinders women from thriving in
the industry.
Work Life Balance and Human Resource Policies
Some men think that in the extreme case, work-life balance could pose as a barrier for women in VC.
One respondent said “For lots of women work/life balance is more important than it is for men. So
when you need to work crazy hours, it's harder for women. But it is very personality based because I
know a bunch of women who work crazy hours but they have different priorities."
However, in general, the men interviewed believed that VC offers a relatively good work-life balance.
The results parallel many of the women’s sentiments about it being more flexible than previous jobs,
albeit a role where one has to always “be on.”
Similarly, about pursuing more strict human resources, male VCs did not see this as a solution to
helping women in VC. When asked, “If you have a human resource department, does it do anything
to support gender equality in your view? How?" one male respondent replied, "No, I think it's more
about education from the ground up, about getting more women in entrepreneurship and technology
areas?” Men at small VCs that do not have human resource departments, would be wise to have
more of a human resource mindset when considering future partners. This refers to consciously
hiring diverse candidates and creating an inclusive environment so that when a woman is hired, she
can expect a professional and inclusive work environment.
Legal Issues
As discussed in the legal issues section, women do not have a high rate of reporting discrimination in
the work place. As a result, when men were asked “Are you aware of any situations where a woman
31
was subject to serious discrimination but decided to “keep quiet”? What was the context, if no, how
about the whole industry?” 100% of men said they were not aware. Only 20% mentioned being
aware of industry wide discrimination. However, it is widely understood that even though something
is not reported, it does not necessarily follow that it is not happening. Yet, because only women
speak to these matters, it is no surprise that the overwhelming majority of men are not aware of
unreported gender discrimination issues whether by sexual harassment or micro aggressions.
However, the industry wide lack of awareness on discrimination reveals that gender issues are not
being discussed in the workplace as frequently as they should be, although they take place in firms
with an uneven gender balance and contribute to the low number of females in VC. Therefore,
although men could not see how legal issues affect a woman’s decision to either remain or enter in
VC, as our study has discussed, it does play a role.
Perceived Strengths and Challenges of Women by Men
Overall, men praised women for their strong networking and interpersonal skills. One respondent
explained, “There is a level of work ethic females bring. This may be because they feel that they have
to work harder because they are a minority, but they are networking goddesses.” When asked what
strengths women bring to VC, another respondent answered "Intelligence, creativity, perspective
beyond tech, and strong interpersonal collaboration skills." Meanwhile another male observed,
“Multitasking! I'm amazed that women can listen to conference calls, type and still manage to
observe everything!" Since VC is a social industry and personality plays a role in connecting ideas to
funds, the communication skills women bring should not go overlooked.
Male VCs also discussed some of the challenges they observed that women must overcome if they
are to recruit more women into the field. One respondent reflected on a panel he recently attended
which had two women and two men, and said that “the men seemed very relaxed, but the women
felt like proving points, or maybe even trying to prove themselves.” Another observed “there is more
pressure on women and it feels as though they were passing messages to other women that you have
to be like me to make it this far." Moreover, several of our male respondents said that in general,
women cooperate less with each other. A male VC explains one possible reasoning for this
perception, “Because it’s so hard for women to get to partner, they always feel like it is a
competition.” Instead of embracing a "Queen Bee" status as one of the few women in VC, but rather
serving as a mentor and sponsor for other women, perhaps more women would consider joining VC.
32
8. Recommended Solutions
1) Recognize the Unconscious Bias
The more this is internally debated the more there will be awareness. The team recognized that
lawsuits are not the answer. Change has to come from people with power in the industry - and that
means mainly men first - who want it to be different. Venture capital firms invest in companies that
are changing the world and reinventing how we live. If they take that same positive creative energy
and turn it inward, they can make a difference. This mindset of carrying biases (by both men and
women) and simply to be aware of it can influence and address several key issues in this industry.
2) Increase Woman Mentorship
More women need to become mentors. That would create more women VCs and a more diverse
group of talented young professionals. This would enable a culture that is more accepting of women
and their unique strengths. Women need role models and they need mentors. Women who are
successful should coach other women. It is crucial to have more women role models, as well as to
make women visible. Simple actions can make a difference: write tweets and blogs, attend podcasts
and seminars. Currently, many women feel reluctant to talk about increasing women’s participation
because they are afraid to be viewed as sexist. Another solution is for more mentors to become
sponsors. The team defines sponsorship as someone putting their reputation on the line to sponsor
another person. It is not mentoring, which is giving regular advice. Often mentors can become
sponsors, which is why it is important for women to actively cultivate mentor relationships.
3) Training Women on Fund Raising
The industry prides itself on the fundraising nature of the business, and the ability to do it
successfully is valued as a key strength. Our team recommends training women on raising money.
The Kaufmann Fellowship program aims to do this. If this program is well established, the industry
should grant scholarships for women. Senior VCs need to embrace bringing junior women analysts to
fundraising meetings so they can learn. Our team suggests training and coaching programs for
women involve topics: how to network via role models toward confidence building, improve fund
raising abilities, foster investor’s perspective as well as to better deal with discrimination
4) Build a Powerful and Inclusive Network
Networking is critical women because they need to meet people who can add skills, introduce them
to other people and provide advice. A key change our team recommends is that funds bring in more
women so they gain experience that enables them to start their own. Men in financial services
socialize together, golf together and endorse each other. This kind of powerful network, if duplicated
by women, would provide job opportunities and other support. The network by women could
centralize the database for available prospective women VC at the right standard. This is what
women need to create for teach other. Men should then consider tapping into the women networks
which need to be created by women VC.
5) Create Public Awareness
Raising public awareness of the low ratio of women could enable women to better enter the VC
market. Among all the VCs funded by institutional investors, only 1% have women partners. If
33
institutional investors were to consider VCs with women partners intentionally, more VCs could be
motivated to promote/hire women partners. Currently, the gender inequality problem has attracted
little attention, and there is no upside down pressure on the VCs. Our team recommends marketing
campaigns to increase awareness about women in VC.
6) Encourage Job Application
Most interviewees view VC as gender equal in the hiring process, contrary to what the statistics from
various sources (5-8%) show. Some of our interviewees thought the lack of female applicants is the
biggest issue and commented that only 30% of the applicants are female, making it difficult to find
talent with extraordinary qualifications. Others indicated the reason could be that women are less
comfortable applying for jobs in VC. This seems plausible. If one female and one male have the same
skill sets, the male is more likely to apply than female given the visible male dominated structure of
the industry. It is circular and requires women in senior roles in the VC to play a vital role in
mentoring/campaigning/increasing public awareness to encourage higher job application rates by
women. VC needs to be more active with on-campus recruiting or networking with younger student
who are willing to be in the pipeline
7) Empower HR & Adopt an HR Mindset
Simply having an HR department is not enough. A power shift has to occur from the partner to the HR
person or the department, especially at institutional VCs. The industry must recognize of the
underlying biases against women. Ignoring them will only make the situation worse. HR policies
should be put in place to encourage VCs to hire and recruit more women (if they are in the applicant
pool). Most small VC firms do not have HR teams or even a single dedicated HR person. So VC
partners need to have more of an “HR mindset” and be more conscious of diverse hiring and creating
an inclusive environment. This includes seeking women applicants, participating in public awareness
campaigns and on- campus recruiting events. In addition, VC partners can:
 Look beyond their “easy to access” networks for new hires, having at least one woman who
can act as a maven in the butterfly effect. Look outside the usual networks of similar groups
of people for seniors and partners.
 Hold structured interviews with a pre-set list of qualifications that is maintained for all
candidates at all times.
 Look for more than just a “fit,” which implies hiring similar people (confirmation bias).
8) Develop state-backed VC influences
Have more women in government-led funds. If states mandate (as in New York, Texas or California)
women and men in senior positions, that would encourage institutional and corporate VCs to
consider more women for investment teams.
Institutional VCs need to require that a percentage of their funds under management be invested in
funds with at least one woman partner. These mandates cannot be overly restrictive, such as
requiring women to have 51% ownership of the fund, which is not a reasonable approach. The
mandates also cannot focus solely on experienced managers, as this does not solve the problem
either. There needs to be publicly available lists of institutional VCs that invest in women. There is no
way to identify such funds today. Our team recommends that legislators investigate how much of
government pension funds are invested by women. Legislation is required to make that mandatory.
34
9. Acknowledgments
The team would like to thank all those who assisted in our research.
Special thanks to:
Hilary Gosher, Adjunct Associate Professor of International and Public Affairs
Christopher Reim, Adjunct Associate Professor of International and Public Affairs
Scott Grubin, Counsel, Widgor LLP
Todd Gutflesisch, Esq., Wechsler & Cohen, LLP
Lynne Hermle, Partner, Orrick, Herrington &Sutcliffe LLP’s
Candida G. Brush, Vice Provost of Global Entrepreneurial Leadership, Babson College
Claudia Iannazzo, General Partner, Pereg Ventures
The team would like to express our gratitude for to Adam Quinton, CEO of Lucas Point Ventures, and
Jill Stockwell, editor at BofA Merrill Lynch Global Research, for their guidance and feedback in
preparation of the report and presentation.
The Team would especially like to thank those who took the time to respond to our general inquires
as well as those who were able to participate in our interviews. The names of all participants and
companies are kept anonymous for confidentiality.
35
10. Appendices 1-4
1. Title Definition
In all seriousness, we believe that there is a lot of well-justified positive momentum around VC
investing. But we are also keenly aware of the risk of becoming complacent in the face of high
valuations for companies that have not yet proven their merit. We also believe that not all VC firms
are created equal. Just as VC firms need to discriminate among possible portfolio companies,
investors should distinguish VC firms riding the bandwagon from those whose knowledge of
businesses, people and markets enable them to see tomorrow's game changers before the rest of the
crowd.
For the purposes of clarity and to address the confusion around title inflation we provide our
understanding of the various title ranks as follows:
Analyst: Those are the most junior professionals in the company, and usually have one to two years
of prior work experience, either with a startup, an investment bank (very often focusing on
technology sectors), or a strategy consulting firm. The key role of the analyst is to network, take part
in industry and VC events, keep an eye on latest industry trends, and cold-call potential target
companies to learn more about their business and obtain a meeting with the founders. They also
might have some degree of involvement into the deal process (i.e. due diligence, market analysis, and
some valuation work) but their focus is largely on "origination". This is a very entrepreneurial role,
and analysts in VCs are often very well connected and aware of the latest happenings in the industry.
Analysts can be promoted to the associate level after a few years, but many of them choose to do an
MBA or go the entrepreneurship route, founding their own businesses.
Associate: Associates reach the next level in the hierarchy, and are on the "partner track", which
means that they are expected to stay until they make it to partner. Associates are usually ex-bankers,
consultants, investment professionals (i.e. private equity, other VC funds) or operational leaders with
three to five years’ experience, sometimes with an MBA or a PhD. The role is more focused on due
diligence, business plan analysis, executing transactions, analyzing interesting industry sub-sectors,
and helping out portfolio companies. It is the more analytical and deal-making role within the VC
fund. Associates usually get promoted to principal after a few years of successfully executing deals.
Some of them also leave to create their own businesses.
Principal: Principals are in charge of making portfolio companies run smoothly and will be on the
board of a few portfolio companies. In addition, their role is to network and identify interesting
opportunities for the fund to negotiate terms of acquisitions, and also to exit portfolio companies
successfully. Principals tend to stay until they are promoted to partner level, which happens once
they have proven their ability to generate good deal for the firms and generate returns.
Partner48: Partners and principals have very similar roles in the firm. However, partners tend to be
less involved in the daily deal- making and are more focused on high-level tasks such as identifying
48 What is the difference between Limited Partners (LPs) and General Partners (GPs) in the venture capital business? (n.d.). Retrieved May 11, 2016,
from https://www.quora.com/What-is-the-difference-between-Limited-Partners-LPs-and-General-Partners-GPs-in-the-venture-capital-business
36
key sectors to invest in, giving the green light for investments and exits, sitting on the board of some
portfolio companies, networking at a high level, representing the overall firm, as well as raising
money for the firm (every five to seven years) and communicating performance to investors.
There are also various types of VC funds, which are described for the purposes of our research study:
● Venture partner: A Venture Partner is a person who a VC firm brings on board to help them do
investments and manage them, but is not a full and permanent member of the partnership. The
"full and permanent" members of the partnership are often called General Partners, Managing
Members, or Partners. Lawyers do not like the term General Partners and more and more firms
are avoiding that term. But for many reasons the Venture Partner term reflects the fact that the
firm and the individual are not as tightly committed to each other as the members of the
partnership are. Some common examples of Venture Partners are; former partners who are semiretired but still want to be able to do deals, former entrepreneurs who have multiple business
interests but want to be able to do deals with a VC platform, and a partner in waiting who is
headed to become a full partner.
● Corporate VC49: Corporate VCs can be organized as an independent arm of a company or a
designated investment team off their company’s balance sheet. The goal of a corporate VC is
largely the same as an institutional VC: to invest in high-growth companies that drive value for the
company. Technology and healthcare giants have held a venture presence in the industry for a
long time. Google Ventures, Cisco Investments, Dell Ventures, Intel Capital, and Johnson &
Johnson Innovation are all marquee names in the space.
● Institutional: Institutional venture capital - i.e. the firms usually referred to as VCs - are managed
funds with $25M to $1B under management to invest in companies with high-growth potential.
This capital comes from limited partners, the fund’s investors, and are managed by general
partners, who are the fund’s partners, run the fund and make investment decisions. While 80% of
all venture funding is deployed by institutional VCs, a small percentage of the firms raise the bulk
of the total venture capital. Understanding the dynamics of the industry should help frame the
economics of institutional VCs.
● Accelerator50: The most distinct difference between accelerators and incubators is the time frame
of each. An accelerator works with startups for a short and specific amount of time, usually from
90 days to four months. Accelerators also offer startups a specific amount of capital, usually
somewhere around $20,000. In exchange for capital and guidance, accelerators usually require
anywhere from 3 to 8 or more percent ownership of your company. All these features make
accelerators much more structured than incubators.
● Incubator: With mentorship periods often lasting more than a year and a half, incubators focus
less on quick growth and have no specific goal in mind for your company other than to become
successful at the right pace. In fact, the goal of some incubators may be to prepare your company
49 Not The Same: Understanding Corporate Venture Capital Versus Institutional VCs. (2016). Retrieved May 11, 2016, from https://www.cbinsights.com/blog/corporate-venture-capital-institutional-venture-capital/
50 Accelerators vs. Incubators: What's the Difference? (2014, December 11). Retrieved May 11, 2016, from http://microventures.com/education/accelerators-vs-incubators
37
for an accelerator program. Incubators take little to no equity in your company, and can afford to
because they do not provide upfront capital like accelerators. Many incubators are funded by
grants through universities, allowing them to provide their services without taking a cut of your
company.
● GP: The venture capital fund is governed by a contract between the GP and the LPs called the
Limited Partnership Agreement ("LPA"). The venture capital fund pays a management fee to the
GP and the GP also gets a share of the profits of the fund called carried interest. The
management fee is generally calculated as a percentage of the committed capital of the fund for a
period and then declines on a formulaic basis once the period ends where the venture capital
fund makes all of its initial investments (5 - 6 years).
● LP: The LPs commit to invest into the venture capital fund over a period of time to fund expenses
of the fund and to fund investments into companies. The GP commits to invest a small percentage
alongside the LPs to align interests. The standard GP investment is 1% of the fund capital but
some VCs will invest more.
2. Interview Questionnaire for Women Venture Capitalists
1. What led you into Venture Capital industry?
2. Do you get a share of the carry (Yes/No/Other)
3. Please confirm your title? How long have you been at your current VC firm and the industry?
2.1 Venture Capital is male dominated. When you joined was that fact a concern to you?
(Yes/No/Other)
2.2 If no, why was that not a concern? Could you explain?
2.3 If yes, do you think things are getting better/worse? Explain.
3.1 Have you observed a decrease in the number of women in the industry over the last 5 years?
(Yes/No/Other)
3.2 If yes, how did you notice it? What do you think would be the biggest reason for the decrease?
3.3 If no, do you think the number of women will increase in the next three years? Why do you think
there will be an increase?
4.1 Should read as follows: Are you mostly working with early stage startups (for example up to Series
B) or late stage start up (e.g. Series C or later)?
4.2 Do you find your previous work experience is helpful for your position in Venture Capital?
(Yes/No/Other)
4.3 Do you think either of the operational experience or an engineering background is important to
success at a VC or both?
5.1 How many hours do you work per week including weekends?
5.2 Compared to your previous job, how would you define your work-life balance in a VC?
5.3 Generally, do you think the work-life balance in VC is good? (Yes/No/Other)
6.1 What strengths do women bring to VC?
6.2 Do you observe any weaknesses relative to male colleagues?
7.1 Did you join an established fund? Or did you help start a fund?
7.2 (Partner level for Institutional VC) was the entrance to the industry easier for you because you
had personal wealth?
38
8.1 (General level question/Institutional VC) Partners at VC firms typically need to make a
contribution to their funds, which can require significant personal capital or a willingness to fund the
commitment through loans. Do you think the need for this personal wealth at the partner level is
more of a challenge for women than men? And do you think it inhibits junior women in VC from
aspiring to be partners?
8.2 (Institutional VC) How comfortable are you asking your friends and family to invest in your fund
assumes you are asked to? How comfortable are you asking institutions to invest?
9.1 Was the hiring process for your organization fair for women from your point of view?
(Yes/No/Other)
9.2 Do you have any female friends who have difficulties finding a job / getting promotion in Venture
Capital? Please explain
10.1 Do you feel that the promotion process at your firm is fair and objective such that women and
men both get a fair shot? (Yes/No/Other)
10.2 How? Could you explain?
11.1 Does your firm have a regular performance review process or is it more ad hoc? ?
(Yes/No/Other)
11.2 However it works do you feel that women and men in the firm are assessed equitably and fairly?
(Yes/No/Other)
11.3 Are they paid equally on the same job?
12.1 Do you have a HR department in your organization? (Yes/No/Other)
12.2 If you have an HR function, does it do anything to support gender equity in your view? How?
12.3 If no at the moment, do you think it would make any difference in that regard if you had one?
How?
13.1 Where there is gender discrimination in the venture industry women seem very reluctant to take
legal action. Would you agree with that comment? (Yes/No/Other)
13.2 Are you aware of any situations where a woman was subject to serious discrimination but
decided to “keep quiet”? What was the context? If no, how about the whole industry?
13.3 Do you think there is a relationship between the lack of legal protection and women’s
advancement in the VC space? (Yes/No/Other)
14.1 Is there any formal or informal mentorship in your organization? (Yes/No/Other)
14.2 Do you think the mentorship program works the same way for women as it works the same does
for men? If not, how?
15.1 Do you socialize with your male co-partners from your organization after work hours?
(Yes/No/Other)
15.2 If yes, what types of social activities do you normally have with your male co-partners? How
often?
16.1 Do you ever experience difficulties in communicating with your male co-partners?
16.2 Do you feel your bosses recognizes your contribution in meetings and otherwise as they do for
male colleagues at the same level? (Yes/No/Other)
17.1 How often are the networking activities held in the industry? What kinds of activities are there?
(E.g. golfing, fishing) Do you enjoy them?
17.2 Do you feel those networking activities are equally open to women? (Yes/No/Other)
18.1 As a female investor, do you feel that the entrepreneurs treat you in the same way as your male
colleagues? (Yes/No/Other)
39
18.2 If entrepreneurs treat female investors in the same way, why?
19. What percentage of the pitch meetings your firm takes involve companies with at least one
female founder on the team? And what percentage has women CEOs?
20.1 Do you have to be careful rebutting/refuting a comment from a male colleague as oppose to a
female colleague? (Yes/No/Other)
20.2 Please explain.
21.1 Are you always the one taking minutes for the meeting? Do you volunteer to do that or are you
assumed to do it?
22.1 Is the leadership of your firm conscious of the debate about diversity in venture capital more
broadly? Do they talk about it internally? (Yes/No/Other)
22.2 Are they taking any steps to promote a more diverse and inclusive organization? If so could you
provide with some examples please?
23. What are the main reasons there aren't more women in Venture?
24. What are the three ways to improve the number of women in Venture?
3. Interview Questionnaire Male Venture Capitalists
1.1 Please confirm your title? How long have you been at your current VC firm and the industry?
1.2 Are there any women in your organization? (Yes/No/Other)
1.3 If yes, are they in the investment team? (Yes/No/Other)
1.4 Are there any female partners in your organization? (Yes/No/Other)
2.1 Venture Capital is male dominated. When you joined did you pay any attention to that fact?
(Yes/No/Other)
2.2 If yes, do you think things are getting better/worse? Explain.
2.3 If no, did you observe it over time? Please explain
3.1 Have you observed a decrease in the number of women in the industry over the last 5 years?
(Yes/No/Other)
3.2 If yes, how did you notice it? What do you think would be the biggest reason for the decrease?
3.3 If no, do you think the number of women will increase in the next three years? Why do you think
there will be an increase?
4.1 Should read as follows: Are you mostly working with early stage startups (for example up to Series
B) or late stage start up (e.g. Series C or later)?
4.2 Do you find your previous work experience is helpful for your position in Venture Capital?
(Yes/No/Other)
4.3 Do you think either of the operational experience or an engineering background is important to
success at a VC or both?
5.1 How many hours do you work per week including weekends?
5.2 Compared to your previous job, how would you define your work-life balance in a VC?
5.3 Generally, do you think the work-life balance in VC is good? (Yes/No/Other)
6.1 What strengths do women bring to VC?
6.2 Do you observe any weaknesses relative to male colleagues?
7.1 Did you join an established fund? Or did you help start a fund?
7.2 (Partner level for Institutional VC) was the entrance to the industry easier for you because you
had personal wealth?
40
8.1 (Institutional VC) How comfortable are you asking your friends and family to invest in your fund
assumes you are asked to? How comfortable are you asking institutions to invest?
9.1 Was the hiring process for your organization fair for women from your point of view?
(Yes/No/Other)
9.2 Do you have any female friends who have difficulties finding a job / getting promotion in Venture
Capital? Please explain
10.1 Do you feel that the promotion process at your firm is fair and objective such that women and
men both get a fair shot? (Yes/No/Other)
10.2 How? Could you explain?
11.1 Does your firm have a regular performance review process or is it more ad hoc? ?
(Yes/No/Other)
11.2 However it works do you feel that women and men in the firm are assessed equitably and fairly?
(Yes/No/Other)
11.3 Are they paid equally on the same job?
12.1 Do you have a HR department in your organization? (Yes/No/Other)
12.2 If you have an HR function, does it do anything to support gender equity in your view? How?
12.3 If no at the moment, do you think it would make any difference in that regard if you had one?
How?
13.1 Where there is gender discrimination in the venture industry women seem very reluctant to take
legal action. Would you agree with that comment? (Yes/No/Other)
13.2 Are you aware of any situations where a woman was subject to serious discrimination but
decided to “keep quiet”? What was the context? If no, how about the whole industry?
13.3 Do you think there is a relationship between the lack of legal protection and women’s
advancement in the VC space? (Yes/No/Other)
14.1 Is there any formal or informal mentorship in your organization? (Yes/No/Other)
14.2 Do you think the mentorship program works the same way for women as it works the same does
for men? If not, how?
15.1 Do you socialize with your female co-partners (or other colleagues) from your organization after
work hours? (Yes/No/Other)
15.2 If yes, what types of social activities do you normally have with your male co-partners? How
often?
16.1 How often are the networking activities held in the industry? What kinds of activities are there?
Do you enjoy them?
16.2 Do you feel those networking activities are equally open to women?
17.1 Do you ever experience difficulties in communicating with your female co-partners (or
colleagues)?
18.1 Do you feel that the entrepreneurs treat you in the same way as your female colleagues? 18.2 If
entrepreneurs treat female investors in the same way, why?
19. What percentage of the pitch meetings your firm takes involve companies with at least one
female founder on the team? And what percentage has women CEOs?
20. Is the leadership of your firm conscious of the debate about diversity in venture capital more
broadly? Do they talk about it internally?
21. Are they taking any steps to promote a more diverse and inclusive organization? If so could you
provide with some examples please?
41
22. What are the main reasons there aren't more women in Venture?
23. What are the three ways to improve the number of women in Venture?
4. Additional information on Table 2.
Babson study: The percentage of women partners in venture capital firms declined significantly since
1999 from 10% to 6%.At the time of this report, 139 of the venture capital firms had women partners.
According to a report by Babson, only $1.5 billion (3%) of venture capital funding went to companies
with a female CEO.
Gompers Report51: Between 1975 and 2003, 79 percent of the VC firms had no female investors. Of
those firms that had a female investor, the vast majority (126 out of 169) had only one. In total, their
sample included data on 3,225 male venture capitalists and 212 female venture capitalists, with
females representing just 6.1 percent of the sample. Nearly 30% of both men and women have prior
experience as a venture capitalist before they join the firm in which we identify their investment.
When they compare male and female venture capitalists, they find that men are far more likely to
have been an entrepreneur (17.1% vs. 8.0%). Similarly, women are less likely to have been a CEO
(19.6% vs. 11.8%) or to have been employed in product development (11.1% vs. 6.1%). These
patterns may influence the performance of female venture capitalists. Many entrepreneurs often
speak of the advice that they can receive from a seasoned CEO, technology executive, or former
entrepreneur. If fewer female venture capitalists have these backgrounds, then better entrepreneurs
may be less likely to take money from a female venture capitalist. Female venture capitalists have
investment performance that is approximately 15% lower than their male colleagues. This effect is
largely attributable to a lack of contribution to performance from a female venture capitalist’s male
colleagues. Women venture capitalists do not benefit, on average, from having good colleagues in the
firms in which they work. However, that this lack of benefitting from male colleagues’ experience
disappears in older, larger firms and in firms with other female venture capital investors. Also,
investments made by females are 2.1% less likely to go public. Given an unconditional probability of
going public of 14.3%, this effect is economically significant, representing roughly 15% lower
performance.
Pitch Book: Women represent 5.6% of investment decision makers at all U.S. VC firms that have
raised at least $100 million since 2009. Women are better represented at the smallest VC firms52:
14% of investment professionals at firms with under $50 million in assets under management are
women, 6% of investment professionals are women at firms with $1 billion-plus.
The Social Capital Partnership53: Of the 71 funds representing more than $160 billion in assets under
management and broke out the racial and gender mix of the investment leadership, 44 have 0 female
senior investment Team members (62%), 92% of senior investment Team members at top VCs are
men. Women make up 60 percent of non-investing roles at venture firms in the survey, but only 8
percent of the senior investment Team.
51
Same as above in 7.
In light of Pao: Where are women at top VC funds? (2015). Retrieved May 11, 2016, from http://www.cnbc.com/2015/03/27/waiting-for-pao-verdictwhere-are-women-at-top-vc-funds.html
53
Cutler, K. (2015, October 06). Here’s A Detailed Breakdown Of Racial And Gender Diversity Data Across U.S. Venture Capital Firms. Retrieved May 11,
2016, from http://techcrunch.com/2015/10/06/s23p-racial-gender-diversity-venture/#.ivhkzii:gMXJ
52
42
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44
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Inc.; Page 3-28
 Who’s winning in the battle for female finance
professionals;http://news.efinancialcareers.com/uk-en/238353/women-in-finance/
 Fran Houser, Because I Believe Every Driven Female Entrepreneur With A Great Idea Deserves
Access to Capital and Mentorship; https://onmogul.com/stories/iamamogul-because-i-believeevery-driven-female-entrepreneur-with-a-great-idea-deserves-access-to-capital-and-mentorshipby-fran-hauser
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51a9-8218-4b84-be15-eaff58009767.pdf
 IBM venture capitalist Deborah Magid: ‘We need more successful women
founders’;https://www.siliconrepublic.com/start-ups/2016/02/11/ibm-venture-capitalistdeborah-magid-interview-women-founders
 Dear Investors: So You Want to Take Diversity Seriously (Part 1);
https://medium.com/@mitch_freada/dear-investors-so-you-want-to-take-diversity-seriouslypart-1-777972b5450c?_hsenc=p2ANqtz-_JR1BuDRnbD9zcXcxdZ6JU2TJdW9YKTD1uaJWPRgdYhgxoDPvUmJHTxXP7Zw3BNKsL3p1ThxSY0Gy0s5hrtKuLBmh9w&_hsmi=26420517#.o5r90mha
7
 Women Are Disappearing From Venture Capital;
http://www.bloomberg.com/news/articles/2014-09-30/venture-capital-firms-have-even-fewerwomen-than-they-did-in-1999
 A. Quinton, Your 3 Point Unconscious Bias Action Plan;https://www.linkedin.com/pulse/your-3point-unconscious-bias-action-plan-adam-quintonA. Quinton, It's not just VC - the proportion of
women mutual fund managers has fallen too; https://www.linkedin.com/pulse/its-just-vcproportion-women-mutual-fund-managers-has-adam-quinton?trk=mp-reader-card
 A. Quinton, Startup Fundraising: The Balance Between Form and Substance in Your Pitch;
http://women2.com/2015/11/12/form-versus-substance/?hvid=64a7iD
45
 The tech industry’s “diversity” focus favors one group over pretty much any
other;http://qz.com/523137/the-tech-industrys-diversity-focus-favors-one-group-over-prettymuch-any-other/
 Michelle Quinn, Unequal Silicon Valley; http://www.mercurynews.com/michellequinn/ci_29376341/quinn-unequal-silicon-valley\
 When Glass Ceilings Meet Glass Walls;http://harvardkennedyschoolreview.com/when-glassceilings-meet-glass-walls/
 Percentage of Bachelor’s degrees conferred to women, by major (19702012);http://www.randalolson.com/2014/06/14/percentage-of-bachelors-degrees-conferred-towomen-by-major-1970-2012/
End of Report
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